Contents
Introduction
If Kylie Cosmetics and Fenty Beauty are any indication, having a celebrity at the helm can be a powerful formula for instant brand recognition and built-in loyalty. With a star-powered founder, brands not only gain a competitive edge but also tap into a ready-made customer base fueled by the celebrity’s fan following.
But what happens to the brand when the celebrity’s name is shrouded in controversy?
This Review attempts to break down how celebrity controversies impact brands through the lens of the recent controversy surrounding Kanye West – or Ye, as he now goes by – and his brand Yeezy.
Ye, Yeezy and Adidas
Who doesn’t remember the unstoppable force that was Yeezy with Kanye West at its helm? With a multi-billion-dollar collaboration with the athletic apparel and footwear giant Adidas, Yeezy set up new milestones in the crossover of sneaker culture, streetwear, and luxury, with Forbes describing Yeezy’s rise as “one of the great retail stories of the century”.
However, 2022 saw the end of the highly lucrative collaboration. As the controversies surrounding Ye piled up after a series of inflammatory and antisemitic remarks by Ye, Yeezy’s brand value took a hit, and had Adidas scurrying for redemption by terminating its lucrative partnership with the rapper, a move that cost the brand an estimated $1.3 billion in unsold Yeezy inventory.
The Adidas-Yeezy fallout has been one of the most high-profile business controversies in recent history, highlighting the risks of celebrity brand collaborations. While initially the collaboration earned billions for Adidas, Ye’s increasingly erratic behaviour turned it into a liability overnight.
With billions locked in unsold Yeezy merchandise, Adidas had to manage its financial losses while protecting its brand image. The subsequent sale of the Yeezy inventory and donation of the proceeds to charity, while not enough to completely recover from the aftermath of the controversy, helped Adidas make a clean break from Ye’s controversial statements.
This controversy is a stark reminder of the volatility of celebrity partnerships. While celebrity partnerships can catapult a brand to new heights, they can also be a curse, and here is why…
When the Celebrity Becomes the Brand
Founders often infuse their personality into the brand, blurring the lines between them and making them almost inseparable—think Elon Musk and Tesla or Steve Jobs and Apple. While this integration may help boost the brand’s image when the founder is revered, it can also plummet a brand if the founder’s image takes a hit.
Ye’s shift from a celebrated musician to a controversial figure is a clear example of how a brand’s association with a controversial founder can shift customer loyalty and make customers abandon a brand.
The Fallout Effect
Having polarizing celebrities like Ye be the voice of a brand, even their own, can be the wrong strategic move. When brand and founder identities are tied up, the brand inexplicably suffers from the ripple effects of the founder’s actions.
The Adidas-Yeezy fallout is a vivid illustration of the effect of a toxic founder on brand value. Adidas’s ties with Yeezy and the subsequent fallout due to Ye’s controversial statements led to huge monetary losses and left a lasting stain on the brand’s reputation. The ripples of the Ye controversies could be felt long after the fallout, with Adidas facing the daunting challenge of repositioning itself while grappling with unsold Yeezy merchandise and unsettling questions: Would the products sell without Ye’s endorsement? Would consumers still desire them, or would they now be tainted by controversy?
How to Protect Your Brand from Founder Fallout
Despite being the brand’s creators, the founders must work on creating a separate identity for the brand to ensure its long-term success. Here is what can be done to protect the brand from founder fallout:
1. Diversify:
Create a brand voice independent form the founder. Do not let any one person, even the founder, be the face and voice of the brand. Hire brand ambassadors, evangelists, and influencers to promote your brand to avoid brand dilution due to controversies surrounding a single person.
2. Separation:
Establish clear boundaries between the founder and the brand. The marketing and promotion of the brand must reinforce the demarcation between the brand and the founder.
3. Ethical Standards:
A brand must have clear ethical standards and value systems in place to guide its actions and messaging. The ethical standards help guide the brand’s messaging and core values, thus making it easier to handle problematic founder behavior without losing customer loyalty and diluting brand value.
4. Crisis Management Plan:
A well-thought-out crisis management plan can go a long way in preventing brand value dilution when faced with controversies arising from a founder’s missteps. A crisis management plan veers the brand away from the controversy and towards timely brand rehabilitation.
Can a Brand Fully Recover?
Recovering from a controversy, while not impossible, does take time, and not every brand makes it through unscathed. Some companies with strong goodwill manage to rebound, while others struggle to regain lost ground. The fallout from Kanye West’s Yeezy controversy offers a prime example, with a market giant like Adidas still struggling to recover the market share it lost in the aftermath.
The survival of a brand battling its founder’s controversy hinges on how swiftly it distances itself, pivots, and rebuilds trust with its customers. Uber’s brand overhaul and comeback after the Travis Kalanick era is proof that with the right strategy, a brand can rise from the ashes like a phoenix.
Do you think Yeezy will bounce back from Ye’s controversies and command brand loyalty? Share your thoughts in the comment section below.
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